Location: The Escondida deposit lies 500 meters northeast of the Estrella Pit and 200 meters to the east of Mina Vieja.
Geology: Gold mineralization in the Escondida deposit is very similar to that in El Salto/Mina Vieja, with the Escondida deposit thought to be the faulted extension of one large deposit extending from El Salto. The Escondida deposit is stratiform and hosted within strongly silicified coarse-grained volcaniclastic fragmental rocks and underlying rhyodacite porphyry. The zone is approximately 500 meters long, 250 meters wide, greater than 100 meters thick, and is covered by landslide material and barren postmineral volcanic rocks.
A zone of stratiform high-grade gold occurs at the top of the Escondida zone with geological characteristics identical to those at Mina Vieja.
Activity: In May 2005, Alamos began an underground development drift to conduct underground drilling for resource and reserve definition. At year end, over 1,083 meters of development had been completed, including eight drill stations. Over 93% of the development rock was oregrade material, with 9,381 tonnes averaging 1.37 g/t shipped to the leach pads. The average grade of the development rock was significantly higher than the average 1.01 g/t gold grade calculated for the Escondida deposit in the 2004 Alamos resource estimate.
In late 2005, a surface reverse circulation drilling program at Escondida intersected the highest gold grades ever encountered in the Mulatos deposit, with individual 1.5- meter intervals of 100 g/t to 540 g/t. Fifteen contiguous reverse circulation holes drilled into the Hanging Wall of the Escondida deposit intersected native gold mineralization with local bonanza grades. The best intercept was 29.0 meters of 71 g/t, including an interval of 7.6 meters of 199 g/t.
The high-grade zone is stratiform and directly overlies the lower-grade portion of the Escondida deposit. It is comprised of brecciated cryptocrystalline silica with coarse-grained native gold associated with barite and pyrite as open-space fracture and breccia matrix filling. The coarse-grained gold mineralization is distinct from that found in the lower-grade Mulatos deposit.
A total of 52 surface reverse circulation holes (4,827 m) have been drilled to date to determine the extent of the Escondida Hanging Wall Zone. Additional step-out holes to the south and northeast are in progress. So far, drilling has outlined a zone of mineralization that is 165 meters long by 75 meters wide.
During 2007, the results of a preliminary trade-off scoping study for the Escondida milling option were received and the Company initiated a full scale feasibility study, the results of which are expected in the second quarter of 2008.